Pages

Search

€-Vision

Those who wish to leave – so a German saying – you should not seek to dissuade from so doing. To few people is the phrase more applicable than to Wolfgang Schäuble who is resigning the post of German finance minister and, with it, that of de facto head of the Euro Group. He held these roles since 2009, that is virtually since the onset of the Euro Area crisis. While the crisis and the associated double-dip recession was a failure that had many fathers, Dr. Schäuble was arguably the most wanton of those who, to paraphrase Keynes, blundered in the control of a delicate machine, the working of which he does not understand.

On the other hand, the fact that someone who has caused much harm is leaving an influential post does not mean that his or her influence falls to zero. His arty certainly remains the dominant force in German politics. Nor, alas, does it necessarily mean that the successor will be an improvement: it seems likely that he or she will come from the liberal FDP which campaigned on a manifesto of rejecting any form of transfers or bail-outs, and threatening countries that fail to meet tough fiscal targets with being forced out of the single currency.

At his last Eurogroup meeting the departing German finance minister left a chilling message of his own in the form of a short non-paper on European economic policy. I will go through point by point, but the spoiler is simple: it represents a doubling down of believers in Maastricht and a complete rejection of all the risk-sharing and stability-promoting ideas tabled by the European authorities and, most vividly, by French President Macron. [Read more…]

The Caribbean has been in the news lately for a succession of damaging hurricanes. Yesterday’s German elections seem almost certain to lead to a so-called Jamaica coalition between Mrs. Merkel’s conservatives (CDU/CSU), the liberal FDP and the Greens. (The party colours, black, yellow, green, are those of the island’s national flag). Is Europe in for stormy times? It certainly looks like it.

The debate on reforming the EU and especially the Euro Area is at a critical phase. There has been a flurry of proposals and reflection papers from the EU Commission and think-tanks. Jean-Claude Juncker’s recent State of the EU speech held out the prospect of a push towards deepening EMU. The new French President, Emmanuel Macron, has embarked on domestic reforms, part of the rationale of which is to open up space for Euro Area governance reforms. A speech on this issue is scheduled for this week. Everyone has been waiting for the German elections.

Jean-Claude Juncker’s 2017 State of the European Union (SOTEU) speech was marked, particularly compared with last year’s offering, by a renewed sense of optimism, but also by the urgency of serious institutional reform.

The Commission President covered a wide range of issues and challenges. The overall thrust of his message is that the EU now has the wind in its sails and must seize the opportunity to push ahead, taking further steps to underpin the integration process. That the wind has changed tack is evidenced by the defeat, for now at least, of the populist surge, the slo-mo train-wreck that is Brexit – which has revealed much anti-European rhetoric as simple untruths, and brought home the advantages of close economic integration – and not least the steadily improving economic situation, which has now broadened to many countries badly mauled by the crisis. Unemployment, as Juncker noted, is at a 9-year low.

Perhaps aware of the criticism that the EU is seen as too technocratic and fails to inspire emotions, the Commission President did emotion with a capital E, intertwining personal reminiscences with appeals to values including equality, freedom, the rule of law and transparency.